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Takeaway: Athletic footwear data looking weak. FNP deal pothole. Alibaba comes to NYSE? JCP/Disney. Adidas, Sears Canada, M, AMZN, CROX, TGT

EVENTS TO WATCH OVER THE NEXT 24 HOURS

BBBY - Earning's Call: Wednesday 9/25/13 5:00pm 

HMB - Earning's Call: Thursday 9/26/13 2:00am

ECONOMIC DATA

 

NPD Footwear Data

Takeaway: The athletic footwear industry continues to put up lackluster weekly retail POS results. The latest week was -1.4% per NPD – not good. The only positive is that average selling price is still +3.4%, which is good to see, as ASP degradation is the first sign of a protracted (and unmanageable) slide in industry sales.  Nike’s print tomorrow should offer up additional color on the space.   

 

What’s New Today in Retail (9/25) - chart5 9 25

What’s New Today in Retail (9/25) - chart4 9 25

 

U.K. Retail Sales Rise at Fastest Pace in 15 Months, CBI Says

(http://www.bloomberg.com/news/2013-09-25/u-k-retail-sales-rise-at-fastest-pace-in-15-months-cbi-says.html)

  • "U.K. retail sales rose at the fastest pace in 15 months in September, boosted by grocery and furniture stores, according to an index by the Confederation of British Industry."
  • "A gauge of annual sales growth increased to 34, the highest since June 2012, from 27 in August, the London-based lobby said today. Economists had forecast a drop to 23, according to the median of nine estimates in a Bloomberg News survey. Retailers expect sales to maintain their momentum next month."
  • "A gauge of the volume of orders placed with suppliers climbed to 14 in September from 10 in August and a measure of sales volumes for the time of year rose to 12 from 10. A three-month moving average of sales jumped to 26 from 15."
  • "The CBI’s survey of 61 retailers was conducted between Aug. 28 and Sept. 11."

 

Takeaway: This synchs with comments from Foot Locker and Sports Direct that the UK is clearly getting better on the margin.

 

COMPANY NEWS

FNP, JOEZ - M&A Deals Stalling Near Finish Line

(http://www.wwd.com/business-news/mergers-acquisitions/ma-deals-stalling-near-finish-line-7183770?module=hp-topstories)

FNP:

  • "The frontrunners to acquire Lucky and Juicy have both dropped out... The firm, which declined to comment Tuesday, is still working to sell the brands."
  • "In the case of Lucky, the weakening outlook at the business appears to have been a key factor in the last-minute change in M&A dance partners. Fifth & Pacific had been in exclusive talks with private equity firm Advent International for Lucky, but the deal fell apart 'on the one-yard line' late last month, according to one of several financial sources, who confirmed that the deal fell through."
  • "Even as Advent stepped out, one source said, at least three other players have moved to the fore and are vying for Lucky, although their identities could not be confirmed."
  • "At Juicy, sources said that IDG Capital dropped out of the bidding last week. Talks intensified between Fifth & Pacific and IDG in August, and Authentic Brands Group was seen as a backup bidder. Now it looks as if Authentic could leap to the forefront. Calls to Authentic for comment were not returned."

FNP Takeaway: It goes without saying that this is a bump in the road for FNP.  But as it relates to the sale of Lucky and Juicy Coture – whether they go for $600mm or $800mm is fairly meaningless in the grand scheme of things for this company. Will it move the stock by a buck or two up or down? Yes. Around $0.85 per share for every $100mm to be precise. But either way the proceeds will be enough to completely eliminate FNP’s debt burden 2x over. Then you’re left with a debt free Kate Spade, which is a brand that is nearing $1bn, and headed to $3bn-$4bn, with all the capital it needs to grow.  Still a very big idea.  A sell-off in the wake of the M&A news is all we’d need to once again get much louder on the name.

JOEZ:

  • "Meanwhile, the Hudson deal has been delayed by a month as Joe’s worked to secure financing."
  • "The deal, in which publicly held Joe’s would pay $97.6 million in cash and convertible notes for the assets of privately held Hudson Clothing Holdings Inc., was unveiled on July 15 and originally was expected to close by Aug. 31. When details couldn’t be hammered out in time for a Sept. 15 deadline, a waiver was granted extending the date to Sept. 30."
    "CIT Group, which has provided day-to-day financing to both companies, remains committed to the deal, according to market and financial sources. A second lender, believed to be Goldman Sachs, has withdrawn, with the transaction moving toward completion with the participation of Garrison Investment Group in Goldman’s place."

Alibaba - Alibaba Said to Plan U.S. IPO After Hong Kong Talks Break Down

(http://www.bloomberg.com/news/2013-09-25/alibaba-group-talks-with-hong-kong-over-ipo-said-to-break-down.html)

  • "Alibaba Group Holding Ltd. is moving toward an initial public offering in the U.S. after talks for a Hong Kong listing broke down following management’s proposal to keep control in a share sale, according to two people familiar with the matter."
  • "China’s largest e-commerce company is seeking U.S. law firms to help with an IPO and hasn’t hired banks yet, said one of the people, who asked not to be identified because the process is private. Alibaba is likely to choose the New York Stock Exchange, another person said."
  • "Investment banks have valued Alibaba at as much as $120 billion, which would make it the third-biggest Internet company behind Google Inc. and Amazon.com Inc. based on market capitalization."

Takeaway: Whether you care about the on-line space or not, you need to pay attention to Alibaba. It is bigger than Amazon and eBay combined, and absolutely dominates Chinese e-commerce. Not only is it dominant, but it also does an incredible job with brand presentation. Certain US Premium and Luxury brands that have yet to go into China are evaluating having Alibaba host its site instead of building fulfillment operations organically. They’d never in a million years consider that with Amazon.  Let us know if you want to talk in greater detail about this one.  

 

JCP - Tragic JC Penney Story Gets a Touch of Disney Magic

(http://finance.yahoo.com/blogs/breakout/tragic-jc-penney-story-gets-touch-disney-magic-154656564.html)

  • Disney’s "store within a store" will begin in JCP stores around the country this week.
  • "The Disney mini-stores are a legacy of former JC Penney CEO Ron Johnson's vision to transform the retailer into a collection of shops maintained by different vendors. This is no ordinary licensing deal with generic Disney merchandise that can be found at any retailer. The concept was originally conceived to give Disney 750 to 1,000 square feet of space crammed with exclusive merchandise."

 

Takeaway: Out of any JCP shop-in-shop, this is potentially the most productive space as it spans apparel, toys and collectibles. Also, let’s not forget the fact that Disney now owns the Star Wars license.  

What’s New Today in Retail (9/25) - chart6 9 25

What’s New Today in Retail (9/25) - chart7 9 25

   

ADS - adidas D Rose 4 – Officially Unveiled

(http://sneakernews.com/2013/09/22/adidas-d-rose-4-officially-unveiled/)

  • Adidas unveiled its newest iteration of the D Rose collection on Sunday at the United Center in Chicago. The "D Rose 4" will retail for $140 and will hit stores 10/10/2013.

What’s New Today in Retail (9/25) - chart1 9 25

M - Macy's Ship-From-Store Scales Up To 20,000-Plus Daily Orders

(http://www.fierceretail.com/story/macys-ship-store-scales-20000-plus-daily-orders/2013-09-24)

  • "Macy's has nearly doubled the size of its ship-from-store program over the summer and may now be handling tens of thousands of orders per day, according to the Cincinnati Enquirer."
  • "The department store chain has added fulfillment departments to 200 stores this summer, increasing the total to 500. One store in the Cincinnati area, which has been part of the ship-from-store program since 2012, on a typical day ships 50 to 60 orders to Macy's customers who ordered items that they wanted to buy in another Macy's store that was out of stock. If that's typical, Macy's could be shipping between 25,000 and 30,000 orders every day from the 500 stores. (Macy's hasn't given out actual numbers for the ship-from-store program.)"
  • "That's a typical day. During one of the chain's one-day sales, the volume is typically 75 to 100 orders. During the holiday season after Thanksgiving, the store handles 300 to 400 orders a day."

VNCE - Vince IPO Planned for Up to $200 Million

(http://www.wwd.com/business-news/financial/vince-ipo-planned-for-up-to-200-million-7183854?module=hp-topstories)

  • "The company filed a confidential filing in July with the Securities and Exchange Commission that was made public late Tuesday. The filing, which said shares will trade under the symbol 'VNCE', did not state how many shares will be issued nor at what price."
  • "The filing was made by Apparel Holding Corp., which holds the Vince business and the nonVince businesses under the Kellwood umbrella. Following the IPO, Vince will become Vince Holding Corp. The non Vince businesses will be under the Kellwood Holding Corp umbrella."
  • "For the six months ended Aug. 3, Vince posted net income of $2.4 million on net sales of $114.7 million."
  • Vince is a contemporary apparel brand for men and women.

SCC - Change at top of Sears has landlords eyeing leases

(http://www.theglobeandmail.com/report-on-business/change-at-top-of-sears-has-landlords-eyeing-leases/article14508296/#dashboard/follows/)

  • "Sears Canada Inc.’s move to replace its chief executive officer with a former turnaround specialist has landlords weighing the prospect of buying back more of the retailer’s coveted leases to make way for new rivals."
  • "Sears confirmed on Tuesday The Globe and Mail’s report that CEO Calvin McDonald was leaving 'to pursue an opportunity with a leading international company,' without naming it. He is being replaced by chief operating officer Douglas Campbell."
  • "Landlords have been in talks with Sears about the possibility of buying back prized leases from the struggling retailer, industry sources said. Already, Sears has sold a handful of its leases, raising almost $400-million. The landlords are hankering to regain control of the properties because of Sears’ weak results, the stores’ prominent mall locations, their low rents, and the scarcity of prime retail space."

  

AMZN - Amazon Refreshes Kindle Line With Fire HDX

(http://online.wsj.com/article/SB10001424052702303759604579095743303332998.html)

  • "[AMZN]...is staying the course with a new line of Kindle Fire tablet computers that undercuts competitors like Apple Inc.'s iPad on price, and appears designed largely to drum up sales for other services such as digital music and e-books."
  • "The company plans to unveil on Wednesday two new versions of its tablets—the Kindle Fire HDX—available with 7-inch or 8.9-inch screens."
  • "The Kindle Fire HDX starts at $229 for the 7-inch version and $379 for the 8.9-inch version, and models with 4G wireless connectivity are $100 more each"

TIF - Frederic Cumenal Appointed President of Tiffany

(http://investor.tiffany.com/releasedetail.cfm?ReleaseID=792927)

  • "[TIF] has appointed Frederic Cumenal to the position of President of Tiffany & Co. and also appointed him to a newly-created seat on the Company's Board."
  • "In his new role, Mr. Cumenal, 54, will retain his regional responsibilities and will assume responsibility for the Design, Merchandising and Marketing functions. Mr. Cumenal will continue to report directly to Mr. Kowalski…"
  • Frederic Cumenal joined Tiffany in March 2011 from LVMH where he was the President and CEO of Moet and Chandon.

Takeaway: LVMH is a hot-bed for talent sourcing. In January 2012 Daniel Lalonde left LVMH to become the head of International for Ralph Lauren.  

CROX, VFC - Media Bank: Crocs Says 'Relax'...

(http://www.wwd.com/footwear-news/markets/media-bank-crocs-says-relax-reeboks-revolution-7183330?module=Footwear%20News-Markets-second)

  • "Crocs is giving millennials a reason to kick back and relax. [Crox] declared Sept. 28 International Comfort Day... As part of Crocs’ initiative this Saturday, retail stores throughout the Americas, Europe and Asia will offer consumers a 20 percent discount. The company also will donate 20,000 pairs of shoes to individuals in need."
  • "Timberland is bringing some lightheartedness to the workplace. For the brand’s Pro line of workboots, advertising firm The Martin Agency created a range of TV spots that depict industrial 'work fails.'"
  • "The ads debuted this week on a variety of cable networks, and microsite Stayonyourfeet.com also launched in conjunction with the commercials."

Takeaway: With Timberland, we get it. Crocs – not really.  

TGT - Target Introduces Target Ticket, a Family-Friendly Digital Video Service

(http://pressroom.target.com/news/target-introduces-target-ticket-a-family-friendly-digital-video-service)

  • "[TGT] announced that Target Ticket, its new digital video service, is available to guests nationwide."
  • "Target partnered with Common Sense Media, a San Francisco-based non-profit organization best known for its reviews of movies and television shows. Through the partnership, Target Ticket gives guests access to thousands of reviews, making it easier for parents to choose the right content for their children."

INDUSTRY NEWS

 

Consumers Are Talking…Are Brands Listening?

(http://therobinreport.com/consumers-are-talking-are-brands-listening/)

  • "Once consumers became comfortable purchasing apparel online, brands and retailers sought to enhance the experience through social media sharing options, crowdsourcing — and online customer comments sections. What may have begun as a means of increasing sales via search engine optimization has grown to be a barometer of what’s in and what’s out of favor with the buying public."
  • "Cotton Incorporated set out to quantitatively measure these customer comments, and the result – the Cotton Incorporated Customer Comment Project – reveals what makes apparel consumers rant or rave about their purchases."
  • "Ultimately, the project looked at a collection of more than 200,000 customer comments from 25 key retailer websites including: mass market retailers; chain, department and specialty stores; online-only retailers; and sports specialty stores."
  • "Kantar Retail’s Anne Zybowski, vice-president of retail insights, says comments boards are a high priority for some retailers…'We’ve seen some retailers whose redline or clearance items correlate with a product’s negative online review.'"
  • "The Customer Comments Project also revealed some surprising findings about key products. Positive ratings for denim jeans are the lowest compared to other major categories studied, and uncover significant consumer dissatisfaction with negative textile issues, as well as fiber substitution away from cotton."
  • "Now that cotton prices have stabilized, those retailers who turned to synthetics may want to consider switching back to natural fibers like cotton – or risk the wrath of their customers, who can turn to those very sites to share their discontent with a ready audience."

What’s New Today in Retail (9/25) - chart2 9 25

What’s New Today in Retail (9/25) - chart3 9 25

 

Three Nations Pledge $24M for Bangladesh Factory Plan

(http://www.wwd.com/business-news/government-trade/three-nations-pledge-24m-for-bangladesh-factory-plan-7183413?module=hp-topstories)

 

  • "Canada, the Netherlands and the U.K. have signed an agreement with the International Labor Organization to boost labor inspection and upgrade building and fire safety in Bangladesh’s garment sector."
  • "The three nations 'combined pledged $24.3 million' in support of the ILO-led plan, officials and diplomats familiar with the details of the program, launched in New York during the annual meeting of the United Nations General Assembly, told WWD."
  • "The ILO plan is supported by other parallel initiatives focused on the ready-made sector in Bangladesh, namely the Accord on Fire and Building Safety in Bangladesh that was signed by some 80 global clothing brands and retailers, and covers 1,800 factories, and the Alliance for Bangladesh Worker Safety, a binding five-year undertaking by North American apparel companies and retailers to improve safety in more than 500 factories."